GST Impact of GST on Importers and Exporters

Impact of GST on Importers and Exporters

The implementation of the General Sales tax bill has been delayed by our Finance Minister. Due to this, there is a constant amount of anxiety that is prevailing among the people running the export-import business in India. With the help of this article we can get a clear picture of how the GST bill will affect the export and import business in the country.


Only after some Amendments are made in the constitution can the GST be levied on the imports as presently there are no acts present in the Constitution of India for the GST to be levied.

Irrespective of the fact that if imported goods are produced domestically or not, CGST and SGST will be levied on international imports at the time of importation. Incidence of tax as per convention will take its destination principle and the revenue from the tax from the SGST will be earned by the state in which the imported products are consumed.

Having entered into various free trade activities, it is a difficult task for India to utilize customs duty as an exercise to ensure a balanced playing field. Now there are various endeavors to consider foreign goods on the same level as domestic goods.

Previously importers would use to get benefits on custom duties. They would have to pay a negligible amount on the imported goods which they used for the making of export goods. No such special treatment would be offered to the import goods in the new GST act. GST will be levied on the goods that are imported irrespective of the fact they will be used for re-exportation or not. The General Sales tax act will guarantee this by enforcing CGST and SGST on the imports. Therefore, a balance will be created for the domestic industry and the production sector in regard to the imports.

GST legislature would be drafted on destination based principle thereby:

1. On imports in between different businesses, SGST is to be levied and remitted to the state where the imports are located irrespective from where the products have entered the country. But the destination needs to be mentioned on the import invoice to mean the address of the importer.

2. You should collect the SCST on business to consumer goods and they should me remitted to the state. Here the place of residence of the person is to import the goods regardless of the fact from where the goods have been bought. They are not interested in the original location of production of the goods.

Import Taxes That Would Carry On

There are certain definite duties which cannot be subsumed 7under the GST regime even having after the introduction of the duties. These duties are as under:

1: Basic Custom Duty

2: Anti- Dumping Duty

3: Safeguard Duties

There have been rising industries even after the production of the GST. They are the gaining sectors of leather products, furniture and fixtures, coal and lignite, agricultural machineries, industrial machinery and other machinery which iron and steel as for example the coal and steel and railway transport equipment, printing and publishing equipment and tobacco products. There are several moderate gainers which include the metal products and the nonferrous metals. It also includes transport equipment and other railways.

Imports are expected to decline in the market. These include the textile and the readymade garments, mineral and beverages, coal, crude oil and petroleum and gas and iron ore.


You can structure the GST on the destination principle. In this way, exports escape the burden of GST by zero rating. The goods that are exported without charging VAT are referred to as the Zero- rating goods. These VAT which are paid can also be refunded. Therefore the goods are exported on shorn of taxes. Countries having VAT using resort to zero rating of exports.

There are several export taxes which are bound to carry on. They include:

  • Export Duty

This might not be subsumed under the GST regime

  • SEZ

With the help of GST, you can make sure that all the producers and distributors are treated as complete pass-through and the exports are guaranteed to be zero- rated. In this way, one cannot possibly exempt directly. There is a definite purpose for setting up SEZ. It was to motivate and encourage the production of goods which are to be exported out of India. In this way, even after one withdraws, this would directly benefit the units which are set up in SEZ and would still continue to enjoy exemption in respect of goods and services exported by it. You would be taxed if you sale anything by SEZ to the domestic Tariff Area. There is a similar law which deals with the exemption of SEZ.

  • Foreign Trade Policy

There are certain exemption schemes which are available under the Foreign Trade Policy 2009-2014.  There are also certain central excise and custom legislation which might be available. Although there is discussion about some government duties and documents prepared, there are exemptions which are currently available under custom legislation. 

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